Taiwan Semiconductor Manufacturing Company (TSMC) is reportedly on the brink of finalizing an agreement to manufacture Nvidia’s cutting-edge AI chips in the United States, with production expected to begin in 2025. According to sources familiar with the matter, TSMC would produce Nvidia’s Blackwell chips at a newly established factory in Arizona, marking a significant step in bolstering domestic semiconductor production in the US.
If the deal proceeds, the chips will be fabricated at the Arizona facility, though, due to limitations in the plant’s capabilities, the silicon will be sent to Taiwan for packaging. This is because the Arizona plant will initially lack the chip-on-wafer-on-substrate (COOS) technology required for final packaging—a process still performed in Taiwan. Currently, all of Nvidia’s Blackwell chips are manufactured at TSMC’s facilities in Taiwan.
TSMC’s first Arizona plant, expected to begin operations in early 2025, will focus on manufacturing 4nm chips, a key step in the company’s plans to enhance its US presence. Additionally, TSMC has plans for a second plant in the state, which will produce more advanced 2nm chips by the end of the decade.
This expansion into the US comes with significant government support. TSMC is receiving $11.6 billion in grants and loans under the US CHIPS and Science Act, legislation aimed at strengthening the US semiconductor industry and reducing reliance on foreign manufacturing.
While Taiwan law prohibits TSMC from producing chips using its most advanced processing nodes, such as the 2nm technology, the move is seen as a strategic shift to align with US efforts to localize more of its critical semiconductor production. As such, the new Arizona facility is poised to play a pivotal role in meeting the growing demand for advanced AI chips, including those crucial for Nvidia’s AI and machine learning technologies.
TSMC’s expansion in Arizona underscores the increasing geopolitical importance of semiconductor production and the growing push for more localized supply chains in the global tech industry.
